Finance Lease - A finance lease is a fixed-term obligation with equal monthly payments, usually between twenty-four and sixty months, where the lessee may, after consulting with his/her tax advisor, deduct as a business expense both the depreciation on the equipment and the interest portion of the monthly lease payment.     At the end of the lease the lessee owns the equipment, either for a payment of $1.00 or for a fixed residual payment that is part of the lease agreement.        A finance lease should be considered when it is the intent of the lessee to retain the equipment at the end of the lease term, except in instances where a tax lease (see below) might offer lower monthly payments.

Tax Lease - A tax lease, which can be structured in various ways, is a fixed-term obligation with equal monthly payments, where the lessee may, subject to consultations with his/her tax advisor, deduct as a business expense the entire monthly lease payment.     The depreciation on the equipment reverts to the lessor who is the owner of the equipment.     At the end of the lease term the lessee either owns the equipment, after making a residual payment to the lessor that is usually equal to the fair market value of the equipment, or returns the equipment to the lessor.      If the term of a tax lease is less than the depreciable life of the equipment, as allowed by the Tax Code, the lessee may be able to use a tax lease to write off the equipment faster than he/she otherwise would by owning it.      If it is the intent of the lessee to retain the equipment at the end of the lease term, and the equipment is expected to have a very low residual value at the end of the term, a tax lease can often lower monthly payments than a finance lease.       Examples of equipment that might have low residual values at the end of the lease term include computer hardware or equipment that is affixed to a building, such as Heating, Ventilating & Air Conditioning equipment.       Lessors often provide lower pricing for tax leases toward the end of the year, when they want to reduce their tax exposure.

Equipment Finance Agreement (EFA) - An EFA is a fixed-term obligation with equal monthly payments, where the borrower is the owner of the equipment and the lender has a security interest in the equipment.      The borrower deducts as a business expense both the depreciation on the equipment and the interest portion of the monthly payment.    A lessor may use an EFA, and act as the lender, when the borrower has already taken delivery of, and has paid for, the equipment, when the borrower desires to pay off an existing term loan, normally called a refinancing, when the seller of the equipment is someone other than an equipment vendor, and for computer software where the borrower has to license the use of the software from the software vendor.

Lease Line of Credit - A lease line of credit is useful either when your equipment deliveries take place over several months, or you have ordered several pieces of equipment from different vendors.     With a lease line of credit you make payments only for equipment that has been put into service and is producing revenue for your company.      A lease line of credit can be either a finance lease, a tax lease or an equipment finance agreement (see below).

Our Credit Standards - Norden Capital, as are most other equipment lessors, is a cash flow and credit lender.    A cash flow lender looks to historical cash flow, from the operation of your business, to service your proposed lease obligation.     A credit lender analyzes the credit history of your company, and the individual Owner(s) in the case of personal guarantors, to determine if there is sufficient credit strength to support your lease request.        Smaller requests, usually less than $100,000.00, can often be completed with submission of an application only.      Larger requests will require financial statements on the business and, if the applicant has fewer than 5 Owners, or 1 Owner owning a majority of the stock, personal information on the Owner(s).       Please feel free to go to the Proposal Section, send us the requested information on your transaction, and we will be happy to contact you and give you more specific information on the credit requirements of your particular transaction.

Required Credit Information - Equipment Leases  - We use the credit and financial information you provide to us, as well as your standard credit references, to determine if there is adequate credit strength and sufficient cash flow to support your lease request.     You may provide this information either by a lease application only, depending on the size of your transaction, or by a full financial package, usually consisting of a lease application as well as business financial statements and tax returns and, as required, financial statements and tax returns for individual guarantors.